The Trend of Payment Banks by Enterslice ITES Pvt. Ltd. (2024)

by Enterslice ITES Pvt. Ltd. Start and Manage Business

Whatis a Payment Bank?

It is a fresh face ofthe economy digitalizing at a fast pace. It is like any other bank, butoperating primarily on the digital platform on a smaller scale withoutinvolving any credit risk.

• It carries out most banking operationsexcept can not advance loans or issue credit cards.

• It accepts demand deposits, with amaximum limit up to Rs 1 Lakh per customer, offers remittance services, mobilepayments/transfers/purchases and other banking services like ATM/debit cards,net banking, and third-party fund transfers.

• These banks can operate both, current aswell as saving bank accounts.

• The concept introduced by the ReserveBank of India. Under this payment.

• Payment banks are also allowed to set uptheir branches and ATMs.

• It does not accept NRI deposits.

• Payment banks do not engage in lendingactivities.

Whatare the Advantages of Payment Banks?

1. Astride towards a cashless economy.

2. Payment banks have redefined traditionalbanking system in India also providing digital innovation.

3. Payment banks aim at reaching theremotest area of India where traditional banks have not been able to establishthemselves.

4. The object is to extend the financialservices to small business, migrant labor force, low-income households,unorganized sector and similar classes of people.

Whatare the Guidelines For Payment Bank Registration and Licensing?

i. The Payments Banks is registered as aPublic Limited Company under the Companies Act, 2013.

ii. They shall be licensed under Section 22of the Banking Regulation Act, 1949, with specific licensing conditionsrestricting its activities to

a. acceptanceof demand deposits,

b. Provisionsof payments, and

c. Remittanceservices.

iii. Like traditional banks, they shall begoverned by the provisions of the Banking Regulation Act 1949, Reserve Bank ofIndia Act 1934, Payment and Settlement Systems Act 2007, Foreign ExchangeManagement Act 1999 and Deposit Insurance and Credit Guarantee Corporation Act1961. Other relevant Statutes and Directives, notifications, circulars,guidelines, instructions etc issued by RBI and other regulators from time totime shall apply to them equally.

iv. The successful payments banks will begiven the status of the scheduled bank if, upon commencement of operations,they are found suitable as per Section 42(6) (a) of the Reserve Bank of IndiaAct, 1934.

Whatare the Steps to Apply For the Payment Bank License?

1. Incorporation of a Public LimitedCompany, in accordance with the Companies Act, 2013, and RBI regulations, withthe main objectives of acting as a Payment Bank.

2. Filling up of FORM III under Rule 11,Section 22 of the Act which is a Form of application or a license to commencebanking business by a company incorporated in India and desiring to commencebanking business to the Chief General Manager, Department of BankingRegulation, Reserve Bank of India.

3. The applications will be initiallyexamined for prima facie eligibility. Thereafter an External Advisory Committee(EAC) formed by distinguished professionals shall evaluate the applications.The applicants may be called upon for additional information.

4. The decision to issue an in-principleapproval for setting up of a bank will be taken by the Reserve Bank. TheReserve Bank’s decision shall be final and binding.

5. The validity of the in-principle approvalissued by the Reserve Bank will be eighteen months within which the operationof Payment Bank should commence.

6. So as to ensure transparency, the list ofnames of applicants for Payment bank licenses will be displayed on the RBIwebsite. A similar list for the successful applicants shall also be displayedon the RBI site.

7. Banking Licenses being a matter of highleverage shall be issued on a very selective basis to those who strictlyfulfill the requirements, who have a taintless track record and who are likelyto maintain the best standards of customer service and efficiency.

WhatAdditional Information Has To Be Furnished With The Application?

A. Existing Structure

a. Informationon the individual promoter :

i. Name,DOB, residential status, parents’ names, PAN No. etc

ii. Detailedinformation on the background, the experience of the individual promoter,expertise of promoter, the track record of business and financial worth, etc.

b. Informationon the entity promoting the bank

i. Theshareholding pattern of the promoter entity, MoA, AoA, financial statements ofthe promoter entity of past five years and income tax returns for last threeyears.

ii. Detailedinformation on those comprising the promoter entity/ group

B. Detailed Proposed Structure

The applicants shouldfurnish detailed information about the persons/entities, who would subscribe to5 percent or more of the paid-up equity capital (shareholding pattern) of theproposed bank, including foreign equity participation, in the proposed bank andthe sources of capital of the proposed investors.

C. Project Report covering business potentialand viability of the proposed bank, the business plan, any other financialservices proposed to be offered, and any other information that is consideredrelevant.

D. Any other information, documents that thepromoters may believe to be relevant enough to be furnished

Whatis the Status of Applications Granted ‘In-Principle’ Approval by the RBI?

In February 2015,Reserve Bank of India released the first list of names of the applicants forPayment Banks License. In a total of 41 applications were received till thedeadline. In August 2015, The Reserve Bank of India decided to grant“in-principle” approval to 11 of the 41 applicants to set up payments banks.Following is the list of applicants given ‘in-principle’ approval by the RBI tocommence operations as a payment bank:

1. Aditya Birla Nuvo Limited

2. Airtel M Commerce Services Limited

3. Cholamandalam Distribution ServicesLimited

4. Department of Posts

5. FinoPayTech Limited

6. National Securities Depository Limited

7. Reliance Industries Limited

8. Shri DilipShantilalShanghvi

9. Shri Vijay Shekhar Sharma

10. Tech Mahindra Limited

11. Vodafone m-pesa Limited

Followingis the list of Payment Banks, i.e.; successful applicants who commenced theiroperations as Payment bank, in chronological order:

1. Airtel Payments Bank commenced itsoperations with effect from November 23, 2016

2. India Post Payments Bank Limitedcommenced its operations as a payments bank with effect from January 30, 2017

3. PayTm Payments Bank Limited commenced itsoperations as a payments bank with effect from May 23, 2017

4. FINO Payments Bank Limited commenced itsoperations as a payments bank with effect from June 30, 2017

5. Aditya Birla Idea Payments Bank Limitedcommenced its operations as a payments bank with effect from February 22, 2018

6. Jio Payments Bank Limited commenced itsoperations as a payments bank with effect from April 3, 2018.

Sourceby:https://www.playbuzz.com/item/d812c6bb-e762-4680-9569-82f57af03e10

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Created on May 31st 2018 04:06. Viewed 597 times.

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